Hidden Gems: 3 Small-Cap Tech Stocks With Huge Potential


  • Here are the best small-cap stocks to consider.
  • Doximity (DOCS): Innovative product releases and a partnership that streamlines telehealth visits.
  • PubMatic (PUBM): A market-leading grasp will provide long-term growth indefinitely.
  • Enfusion (ENFN): A $100 million credit facility from BofA enhances the company’s balance sheet, providing capital that paves the way for future expansions and acquisitions.
Small-Cap Tech Stocks - Hidden Gems: 3 Small-Cap Tech Stocks With Huge Potential

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Fed Chair Jerome Powell’s recent comments signal a lenient approach, making it highly unlikely for interest-rate hikes to occur soon, even in the face of a potentially heating economy. This bodes well for American households as the cost of borrowing, from credit cards to mortgages, is expected to decline gradually, along with everyday expenses. Amid this backdrop, this has led to this list of small-cap tech stocks.

Financial markets are poised to benefit, with stock returns anticipated to surge as interest rates stabilize or decrease. If 2023 focuses on stabilizing the economy, 2024 seems poised to enjoy the fruits of these efforts.

Investors are eyeing growth opportunities, and there are promises in these three carefully chosen small-cap stocks poised for expansion in this favorable economic climate.

Doximity (DOCS)

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Doximity (NYSE:DOCS) is a health information services company best known for its telemedicine platform. Yahoo! Finance has 7 analysts predicting a 1-year price range on DOCS to be between $21.00 and $31.00, with a mean of $26.27.

$113.6 million revenue for Q3 2023 grew at an 11.1% 1-year CAGR. Signs of profitability are evident in a 0.21 EPS, growing 24.7% YoY, and an 88.15% gross profit margin well above the sector median. Management demonstrates exemplary abilities in handling operational expenditures through a 28.4% levered FCF margin and a $165.4 million cash from operations.

Doximity demonstrates its capability for further growth through innovative product releases and partnerships made this year. This year, Doximity has released products such as www.BestDoc.ai, which helps patients find medical experts in a localized area for any treatment or procedure. Product innovations like this will help users find what they need faster, improving the user experience. Doximity has also entered a partnership with MEDITECH, integrating the company’s electronic health record (EHR) system into its video telehealth visits. This integration allows doctors to conduct a telehealth visit while pulling patient records simultaneously, significantly improving time management for doctors in telehealth visits. This makes it one of those small-cap tech stocks to consider.

Doximity is a telehealth stock investors should not want to miss out on from its healthy financials, a partnership that improves the telehealth visit process, and more. 

PubMatic (PUBM)

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PubMatic (NASDAQ:PUBM) is a digital advertising firm responsible for developing online advertising software. Currently valued at $17.19, PUBM grew 30.52% YTD.

In 2022, the digital marketing and advertising industry was valued at $531 billion, which is forecasted to increase to $1.5 trillion by 2030 at a 13.9% CAGR. PubMatic is expected to capitalize on this industry growth with its 75.93% market share.

PubMatic displayed strong financials last quarter despite revenue, EPS, and net income all decreasing YoY; EPS and revenue outlasted projections by 950% for EPS and 7.05% for revenue. These positive outlooks of beating projections suggest recovering financials. All in all, PUBM’s strong financials makes it one of those small-cap tech stocks to have on your watchlist.

Ultimately, the largest catalyst backing PubMatic has been the great catalog of publisher clients the company operates with. This list includes industry giants in streaming services, news organizations, and even e-commerce platforms like eBay. Further, the growth of the connected TV business holds great stances for the future of PubMatic’s business strategies, as seen by recent year-over-year connected TV revenue. Strong factors from various PubMatic teams combine to push PUBM into a strong stock for future growth.

PUBM stock, from its recovering financials and market-leading grasp, will provide long-term growth.

Enfusion Limited (ENFN)

Enfusion Limited (NYSE:ENFN) is a growing SaaS platform in the investment management industry. Yahoo! Finance has 7 analysts predicting a 1-year price range on ENFN to be between $8.00 and $12.00, with a mean of $10.10.

Efusion reports $44.3 million in revenue for Q4 2023, growing at a 13.3% 1-year CAGR. Revenue growth of 13.3% outpaced operational expenditure growth of 13.07%, generating profitability, and $8.6 million FCF grew 26.2% YoY. Management has significantly improved return on investments over the past year, well above sector medians.

Enfusion has forged partnerships and deals that position that company for future growth. Earlier this year, Enfusion announced a partnership with Quontigo. The partnership will offer Enfusion clients access to Quontigo’s premier Axioma risk analytics platform through a subscription service, improving the Enfusion user experience. Enfusion has also secured a $100 revolving credit facility from Bank of America. With the capability for flexible loans, the new credit facility will greatly improve the company’s balance sheet as a cost-effective capital source, setting itself up for future expansions or acquisitions. 

With an approximate market cap of $1.29 billion, Enfusion is a ”buy” small-cap stock for investors because of the company’s strong financials. This partnership improves customers’ user experience and more is mentioned above. 

On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.

Article printed from InvestorPlace Media, https://investorplace.com/2023/12/hidden-gems-3-small-cap-tech-stocks-with-huge-potential/.

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